When he reached adulthood, the Chicago entrepreneur threw himself into building an auto and computer parts business in the Midwest that would soon count Ford and General Motors among its customers. Liautaud proudly told his four children that they would be the beneficiaries of all his hard work and success. “They loved, in later years, how I smelled of plastic when I came home for dinner,” he remembers. “They loved my business phone calls. They loved the publicity I got for the breakthroughs we made.”

One of Liautaud’s sons, Jimmy John, also of Chicago and a successful entrepreneur in his own right, says he and his three siblings saw their father as a hero. “I think that made him feel good about being gone, and it made us cheer him, and say ‘Dad is like a superstar.’ ” Jimmy John believed his father had a place for him in the family business. “I didn’t think about what I needed to do, because he had it all figured out for us. I believed this from the time I remember.”

Here their stories diverge. Jimmy John says his father promised him a leadership position in the business when he turned 30. “I was supposed to be taking over everything. I thought I was getting the keys to the kingdom, but when 30 came, I didn’t even get a phone call.”

TOP VIEW For wealth creators, ceding control to future generations and transitioning into a new, less authoritative role in the family is a difficult process. The prerequisite for success is trust in the competence of the children, and enough self-esteem to be able to distance ourselves from the most tangible symbol of our success: our family business.

Liautaud, meanwhile, says he does not remember promising the business to any of his children and, in fact, despite his own observations of dysfunctional family business handovers as a child, he did not make any plans of his own to pass his legacy on to the next generation. “I never wanted my children in my business because they, and everyone else, would be comparing their performance to mine,” he explains.

The chasm of expectations in the Liautaud family resulted in feelings of bitterness and frustration on all sides. Such feelings are all too common in families where the first affluent generation—led by the individual who actually built the family fortune—must cede control of hard-won, life-defining assets to future generations. This process involves redefining family and professional roles, and can be emotionally trying for those accustomed to being in charge of both family and business. It can be equally stressful for members of the second generation, whose opinions, needs and goals may be overlooked during the succession planning process.

Kid Pro Quo
Jay Hughes, an attorney and family consultant based in Aspen and author of the book, Family Wealth: Keeping It in the Family, says that many succession plans fail because the first generation tries to impose its dreams on the second, setting up a cycle of dysfunction and eventual collapse. “The families that fail fast are the ones where the first generation says to the second, ‘You’ll do this for us, and then we’ll do something for you,’ ” he says. “It’s better to ask, ‘What is your dream, and how can the family enhance it?’ ”

Because of the emotional pressures and anxieties that each generation feels when approaching issues of succession, the appropriate questions that each generation should bring to the process often go unasked. Leslie Mayer, a psychologist and CEO of Mayer Leadership Group in Wayne, Pa., who works with affluent families on leadership issues as a senior fellow at the Wharton Global Family Alliance, says that the first generation of wealth creators almost always harbors doubts about the second generation’s competence. “They wonder if their heirs are capable of successfully leading the family,” she says. “They also wonder if, as parents, they have done enough to prepare their children to carry on the family dynasty.”